-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FlSCVnvFSgmcaxysYFKm/zoD7h1pXAoeIGpoUvsQG6n8kdElTrObZTyrUkeVU2ef 1jCgN1rcsZARR5QuVUgCwg== 0000099106-97-000014.txt : 19971117 0000099106-97-000014.hdr.sgml : 19971117 ACCESSION NUMBER: 0000099106-97-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRANS LUX CORP CENTRAL INDEX KEY: 0000099106 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS MANUFACTURING INDUSTRIES [3990] IRS NUMBER: 131394750 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-02257 FILM NUMBER: 97719910 BUSINESS ADDRESS: STREET 1: 110 RICHARDS AVE CITY: NORWALK STATE: CT ZIP: 06856-5090 BUSINESS PHONE: 2038534321 MAIL ADDRESS: STREET 1: 110 RICHARDS AVENUE CITY: NORWALK STATE: CT ZIP: 06856-5090 10-Q 1 TRANS-LUX CORP FORM 10-Q PERIOD ENDING 06/30/94 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1997 ------------------ OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to --------------- ------------ Commission file number 1-2257 ------ TRANS-LUX CORPORATION ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 13-1394750 - ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 110 Richards Avenue, Norwalk, CT 06856-5090 - ---------------------------------------- ---------- (Address of principal executive offices) (Zip code) (203) 853-4321 ---------------------------------------------------- (Registrant's telephone number, including area code) - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------- ------ Indicate the number of shares outstanding of each of the issuer's classes of Common Stock, as of the latest practicable date. Date Class Shares Outstanding - -------- ------------------------------ ------------------ 11/13/97 Common Stock - $1.00 Par Value 990,454 11/13/97 Class B Stock - $1.00 Par Value 296,161 (Immediately convertible into a like number of shares of Common Stock.) TRANS-LUX CORPORATION AND SUBSIDIARIES Index Part I - Financial Information Page No. Consolidated Balance Sheets - September 30, 1997 (unaudited) and 1 December 31, 1996 Consolidated Statements of Stockholders' Equity - September 30, 1997 (unaudited) and December 31, 1996 2 Consolidated Statements of Income - Three and Nine Months Ended September 30, 1997 and 1996 (unaudited) 3 Consolidated Statements of Cash Flows - Nine Months Ended September 30, 1997 and 1996 (unaudited) 4 Notes to Consolidated Financial Statements (unaudited) 5 Management's Discussion and Analysis of Financial Condition and Results of Operations 7 Part II - Other Information Item 6. Exhibits and reports on Form 8-K 10 Signatures 11 Part I - FINANCIAL INFORMATION -------------------------------
TRANS-LUX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS September 30 December 31 ASSETS 1997 1996 ------ ------------ ----------- Current assets: (unaudited) Cash and cash equivalents $ 356,000 $19,274,000 Available-for-sale securities 12,197,000 600,000 Receivables 7,790,000 4,173,000 Unbilled receivables 216,000 2,401,000 Inventories 4,717,000 1,775,000 Prepaids and other current assets 435,000 348,000 ---------- ---------- Total current assets 25,711,000 28,571,000 ---------- ---------- Rental equipment 60,262,000 52,417,000 Less accumulated depreciation 21,894,000 18,465,000 ---------- ---------- 38,368,000 33,952,000 ---------- ---------- Property, plant and equipment 26,114,000 21,655,000 Less accumulated depreciation and amortization 8,052,000 6,973,000 ---------- ---------- 18,062,000 14,682,000 Prepaids, intangibles and other 5,578,000 4,772,000 Maintenance contracts, net 1,072,000 1,270,000 Note receivable, joint venture (excludes $94,000 current portion) 714,000 784,000 ---------- ---------- $89,505,000 $84,031,000 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current liabilities: Accounts payable and accruals $ 6,799,000 $ 6,175,000 Income taxes payable 179,000 105,000 Current portion of long-term debt 1,463,000 203,000 ---------- ---------- Total current liabilities 8,441,000 6,483,000 ---------- ---------- Long-term debt: 9% convertible subordinated debentures due 2005 ---- 4,811,000 9.5% subordinated debentures due 2012 1,057,000 1,057,000 7.5% convertible subordinated notes due 2006 31,625,000 27,500,000 Notes payable 17,991,000 14,744,000 ---------- ---------- 50,673,000 48,112,000 Deferred revenue, deposits and other 2,748,000 3,029,000 Deferred income taxes 3,769,000 3,745,000 Stockholders' equity 23,874,000 22,662,000 ---------- ---------- $89,505,000 $84,031,000 ========== ========== The accompanying notes are an integral part of these consolidated financial statements.
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TRANS-LUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY September 30 December 31 1997 1996 ------------- ------------ (unaudited) Capital stock: Preferred - $1.00 par value Authorized - 500,000 shares Issued - none Common - $1.00 par value Authorized - 5,500,000 shares Issued - 2,441,765 shares in 1997 and 2,441,765 in 1996 $ 2,442,000 $ 2,442,000 Class B - $1.00 par value Authorized - 1,000,000 shares Issued - 298,640 shares in 1997 and 298,640 in 1996 298,000 298,000 Class A - $1.00 par value Authorized - 3,000,000 shares Issued - none Additional paid-in capital 13,904,000 13,818,000 Retained earnings 18,838,000 17,964,000 Other 31,000 (58,000) ---------- ---------- 35,513,000 34,464,000 Less treasury stock - at cost 1,453,821 shares in 1997 and 1,476,552 in 1996 (excludes additional 298,640 shares held in 1997 and 298,640 in 1996 for conversion of Class B stock) 11,639,000 11,802,000 ---------- ---------- Total stockholders' equity $23,874,000 $22,662,000 ========== ==========
THE CHANGES IN CONSOLIDATED STOCKHOLDERS' EQUITY ARE AS FOLLOWS: Additional Common Class Paid-in Retained Treasury Stock B Stock Capital Earnings Other Stock --------- ------- ---------- ---------- ------- --------- December 31, 1996 $2,442,000 $298,000 $13,818,000 $17,964,000 ($58,000) ($11,802,000) 1/1/97 - 9/30/97: (unaudited) Net income 1,006,000 Cash dividends (132,000) Unrealized holding gain 89,000 9% debentures conversion 89,000 151,000 Exercise of stock options (3,000) 12,000 --------- -------- ---------- ---------- ------ ----------- September 30, 1997 $2,442,000 $298,000 $13,904,000 $18,838,000 $31,000 ($11,639,000) ========= ======= ========== ========== ====== =========== The accompanying notes are an integral part of these consolidated financial statements.
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TRANS-LUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (unaudited) FOR THE THREE MONTHS FOR THE NINE MONTHS ENDED SEPTEMBER 30 ENDED SEPTEMBER 30 --------------------------- ------------------------- 1997 1996 1997 1996 ------ ------ ------ ------ Revenues: Equipment rentals and maintenance $ 5,522,000 $ 5,350,000 $17,468,000 $16,273,000 Equipment sales 7,310,000 5,596,000 17,043,000 13,276,000 Theatre receipts and other 1,535,000 1,301,000 4,003,000 3,322,000 ---------- ---------- ---------- ---------- Total revenues 14,367,000 12,247,000 38,514,000 32,871,000 ---------- ---------- ---------- ---------- Operating expenses: Cost of equipment rentals and maintenance 2,815,000 2,971,000 9,005,000 8,883,000 Cost of equipment sales 4,949,000 3,721,000 11,043,000 8,753,000 Cost of theatre receipts and other 1,176,000 976,000 3,015,000 2,529,000 ---------- ---------- ---------- ---------- Total operating expenses 8,940,000 7,668,000 23,063,000 20,165,000 ---------- ---------- ---------- ---------- Gross profit from operations 5,427,000 4,579,000 15,451,000 12,706,000 General and administrative expenses 3,942,000 3,370,000 11,420,000 9,442,000 ---------- ---------- ---------- ---------- 1,485,000 1,209,000 4,031,000 3,264,000 Interest income 281,000 52,000 958,000 95,000 Interest expense (1,072,000) (638,000) (3,291,000) (1,764,000) Other income (expense) 51,000 (19,000) 67,000 (97,000) ---------- ---------- ---------- ---------- Income before income taxes 745,000 604,000 1,765,000 1,498,000 ---------- ---------- ---------- ---------- Provision for income taxes: Current 246,000 218,000 593,000 521,000 Deferred 74,000 36,000 166,000 108,000 ---------- ---------- ---------- ---------- 320,000 254,000 759,000 629,000 ---------- ---------- ---------- ---------- Net income $ 425,000 $ 350,000 $ 1,006,000 $ 869,000 ========== ========== ========== ========== Earnings per share: Primary $ 0.32 $ 0.27 $ 0.77 $ 0.68 Fully diluted $ 0.22 $ 0.25 $ 0.60 $ 0.64 Average common and common equivalent shares outstanding: Primary 1,321,000 1,291,000 1,309,000 1,283,000 Fully diluted 3,585,000 1,674,000 3,645,000 1,674,000 Cash dividends per share: Common stock $ 0.035 $ 0.035 $ 0.105 $ 0.105 Class B stock $ 0.0315 $ 0.0315 $ 0.0945 $ 0.0945 The accompanying notes are an integral part of these consolidated financial statements.
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TRANS-LUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) FOR THE NINE MONTHS ENDED SEPTEMBER 30 1997 1996 ---------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 1,006,000 $ 869,000 Adjustment to reconcile net income to net cash provided by operating activities: Depreciation and amortization 5,272,000 5,277,000 Net (income) loss of joint venture (37,000) 97,000 Deferred income taxes (49,000) 44,000 Changes in operating assets and liabilities: Receivables (1,532,000) (3,031,000) Unbilled receivables 2,185,000 (1,632,000) Inventories (905,000) 122,000 Prepaids and other current assets (66,000) 228,000 Prepaids, intangibles and other (350,000) (239,000) Accounts payable and accruals (2,442,000) 1,632,000 Income taxes payable 74,000 (81,000) Deferred revenue, deposits and other (500,000) (1,108,000) ----------------------------- Net cash provided by operating activities 2,656,000 2,178,000 ----------------------------- CASH FLOWS FROM INVESTING ACTIVITIES Purchases of rental equipment (7,845,000) (5,531,000) Purchases of property, plant and equipment (551,000) (882,000) Payments for acquisitions (net) (2,268,000) ---- Proceeds from (investment in) joint venture 70,000 345,000 Loan to joint venture ---- (941,000) Purchases of securities (14,846,000) ---- Redemption of securities 3,411,000 ---- ----------------------------- Net cash (used in) investing activities (22,029,000) (7,009,000) ----------------------------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from long-term debt 8,075,000 5,700,000 Repayment of long-term debt (2,924,000) (1,352,000) Redemption of Company's 9% convertible subordinated debentures (4,573,000) ---- Proceeds from exercise of stock options 9,000 4,000 Purchase of treasury stock ---- (1,000) Cash dividends (132,000) (131,000) ----------------------------- Net cash provided by financing activities 455,000 4,220,000 ----------------------------- Net decrease in cash and cash equivalents (18,918,000) (611,000) Cash and cash equivalents at beginning of year 19,274,000 665,000 ----------------------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 356,000 $ 54,000 ============================= Interest paid $ 2,445,000 $1,452,000 Interest received 707,000 101,000 Income taxes paid 553,000 542,000 ----------------------------- The accompanying notes are an integral part of these consolidated financial statements.
4 TRANS-LUX CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 1997 (unaudited) Note 1 - Basis of Presentation Financial information included herein is unaudited, however, such information reflects all adjustments which are, in the opinion of management, necessary for the fair presentation of the consolidated financial statements for the interim periods. The results for the interim periods are not necessarily indicative of the results to be expected for the full year. It is suggested that the September 30, 1997 consolidated financial statements be read in conjunction with the consolidated financial statements and notes included in the Company's Annual Report and Form 10-K for the year ended December 31, 1996. Certain reclassifications of prior years' amounts have been made to conform to the current year's presentation. The Company has limited involvement with derivative financial instruments and does not use them for trading purposes; they are only used to manage well-defined interest rate risks. From time to time the Company enters into interest swap agreements to reduce its exposure to interest rate fluctuations. The net gain or loss from the exchange of interest rate payments is included in interest expense in the consolidated statements of income and in interest paid in the consolidated statements of cash flows. Note 2 - Accounting for Income Taxes The provision for income tax expense for the three months ended September 30, 1997 was $320,000 of which $246,000 and $74,000 are current and deferred tax expense, respectively. The provision for income tax expense for the nine months ended September 30, 1997 was $759,000 of which $593,000 and $166,000 are current and deferred tax expense, respectively. There was no change in the valuation allowance during the nine months ended September 30, 1997. Note 3 - Prepaids, Intangibles and Other Prepaids, intangibles and other consist of the following: September 30, December 31, 1997 1996 ------------ ------------ Prepaids and other $ 976,000 $ 719,000 Deferred debenture and note costs 1,812,000 1,836,000 Deferred financing costs 291,000 395,000 Acquisition costs 87,000 91,000 Deposits and advances 111,000 76,000 Patents 213,000 259,000 Goodwill and noncompete agreements 1,534,000 890,000 Investment in joint ventures 110,000 73,000 Long-term portion of officers' and employees' loans 444,000 433,000 --------- --------- $5,578,000 $4,772,000 ========== ========== 5 Note 4 - Change in Estimate The Company reevaluated its previously established estimates of the useful lives of its indoor and outdoor display rental equipment. Current estimates based on use and experience indicate that the actual useful lives of the rental equipment are longer than previously estimated. Accordingly, the Company increased the depreciable lives of its rental equipment effective January 1, 1997, which had a favorable impact of approximately $250,000 and $750,000 on income before income taxes for the three and nine months ended September 30, 1997, respectively. There was a favorable impact of $0.11 and $0.33 on primary earnings per share and $0.04 and $0.12 on fully diluted earnings per share for the three and nine months ended September 30, 1997, respectively, as a result of the change in estimate. Note 5 - Earnings per Share The Company will adopt the provisions of Statement of Financial Accounting Standards No. 128, "Earnings per Share" in the fourth quarter of 1997. The standard specifies the computation, presentation and disclosure requirements for earnings per share. As required by the standard, the Company will restate all prior period earnings per share data presented. The pro forma earnings per share for the three and nine months ended September 30, 1997 are as follows: For the Three Months For the Nine Months Ended September 30, 1997 Ended September 30, 1997 ------------------------ ------------------------ Basic $0.33 $0.78 Diluted $0.21 $0.58 Note 6 - Acquisitions On May 1, 1997, the Company, through its subsidiary Trans-Lux Midwest Corporation, acquired the catalog and custom scoreboard sign business segment of Fairtron Corporation ("Fairtron"), an Iowa corporation located in Des Moines, Iowa, for a cash purchase price of approximately $104,000 (after adjustments), noncompete and consulting fees and assumption of certain debt for an approximate total purchase price of $7.0 million. Additionally, there is a contingent additional purchase price of $250,000, based on future sales. The Company retired approximately $2.8 million of the assumed debt of Fairtron. The purchase was financed by working capital and assumption of certain debt. Fairtron was a manufacturer of custom and catalog scoreboards and related signs. Trans-Lux Midwest Corporation plans to continue the catalog scoreboard activities and certain of the custom scoreboard business. The acquisition has been accounted for using the purchase method of accounting. The $7.0 million total purchase price included current assets, net of cash received, of approximately $4.1 million net book value of accounts receivable and inventories; fixed assets of land, building, leasehold, machinery and equipment; and intellectual property. The excess of the purchase price over the fair value of the net assets acquired has been recorded as goodwill, which is being amortized over 20 years on a straight line basis. The purchase price allocation used in the preliminary pro forma information is based on estimated fair values and may be subject to change as additional information becomes known for the fair value of the property, plant and equipment. The historical financial results of Fairtron included both the catalog and custom scoreboard sign businesses. The historical financial results of Fairtron also included certain expenses which are not expected to continue. Just prior to the acquisition, Fairtron reduced head count by approximately 33%. The Company, accordingly, is operating at a substantial reduction in personnel compared to Fairtron's historical operations. The Company has also 6 taken actions which it believes will reduce operating expenses through the consolidation of facilities and other cost saving measures. In addition, the Company's operation of the custom scoreboard business portion is anticipated to be at a lower level of activity because the Company does not expect to continue to manufacture certain scoreboards that produce lower profit margins. The effects of such actions are not included in the pro forma financial statements. The Company's pro forma financial results are presented to provide information on the impact of the acquisition of Fairtron to the results of operations of the Company for the nine months ended September 30, 1997 and 1996. The historical results of Fairtron included both the catalog and custom scoreboard businesses. The historical results of Fairtron for the nine months ended September 30, 1996 were for the nine months ended December 31, 1996 which represented the first three quarters of their fiscal year. The pro forma financial information reflects the Company's preliminary pro forma results of operations as if the acquisition had occurred as of January 1, 1996 for the nine months ended September 30, 1996 and as of January 1, 1997 for the nine months ended September 30, 1997. The following pro forma financial information should be read in conjunction with the Company's consolidated financial statements. The preliminary pro forma information does not purport to represent what the Company's results of operations or financial position would have been if the acquisition, in fact, had occurred on January 1, 1996 and January 1, 1997 or to project the Company's results of operations or financial position for any future period or at any future date. The results of operations have been included in the Company's consolidated financial statements since May 1, 1997, the date of acquisition. The pro forma consolidated balance sheet is not presented as the transaction is already reflected in the Company's consolidated balance sheet at September 30, 1997. Nine months ended Nine months ended September 30, 1997 September 30, 1996 ------------------ ------------------ Revenues $42,967,000 $44,007,000 =========== =========== Net income $1,026,000 $371,000 ========== ======== Earnings per share - primary $0.78 $0.29 ===== ===== Earnings per share - fully diluted $0.61 * ===== ===== * Not dilutive On September 12, 1997, the Company, through its subsidiary Trans-Lux Castle Rock Corporation, acquired the Lake Dillon Cinemas, a four-plex theatre located in Summit County, Colorado for a cash purchase price of approximately $1.5 million. The purchase was financed by working capital. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Nine Months Ended September 30, 1997 Compared to Nine Months Ended September 30, 1996 The Company's total revenues for the nine months ended September 30, 1997 increased 17.2% to $38.5 million from $32.9 million for the same period in the previous year. Revenues from equipment rentals and maintenance increased $1,195,000 or 7.3% in 1997, primarily due to the increase in new indoor display rentals and maintenance contracts, offset by the expected decline in revenues 7 from the outdoor lease and maintenance bases previously acquired, although the decline is at a slower rate than originally anticipated. Revenues from equipment sales increased $3,767,000 or 28.4% in 1997, primarily due to the acquisition of the Fairtron catalog and custom scoreboard sign business in May 1997, and increased revenue from the sales of outdoor products. This increase was offset by a decline in revenue from the sales of indoor products. In 1996 the Company recognized certain significant sales on the percentage of completion basis which did not recur in 1997. Revenues from theatre receipts and other increased $681,000 or 20.5% in 1997, primarily attributable to the acquisitions of the Gaslight Cinemas in March 1997 and the Lake Dillon Cinemas in September 1997 and increased attendance at the theatres. Cost of equipment rentals and maintenance, which includes field service expenses, plant repair and maintenance, and depreciation, increased by $122,000 or 1.4% in 1997, primarily due to increased field service costs related to the installation of indoor displays, offset by the favorable impact of $750,000 as a result of a change in the estimate of the useful lives of the rental equipment from eight to ten years for the indoor rental equipment and from ten to 15 years for the outdoor rental equipment. The cost of equipment rentals and maintenance represented 51.6% of related revenues for the nine months ended September 30, 1997 compared to 54.6% in 1996. Cost of equipment sales increased $2,290,000 or 26.2% in 1997, primarily due to the Fairtron acquisition and the increase in sales of outdoor products, offset by the decline in sales of indoor products. The cost of equipment sales represented 64.8% of related revenues for the nine months ended September 30, 1997 compared to 65.9% in 1996. Cost of theatre receipts and other, which includes film rental expenses, increased $486,000 or 19.2% in 1997, primarily due to the Gaslight Cinemas and Lake Dillon Cinemas acquisitions and the increase in film rental costs resulting from increased box office receipts. The cost of theatre receipts and other represented 75.3% of related revenues for the nine months ended September 30, 1997 compared to 76.1% in 1996. General and administrative expenses increased by $1,978,000 or 20.9%, primarily due to the Fairtron acquisition, expanded sales efforts, increased payroll and benefits costs and the negative impact of the effect of foreign currency exchange rates. Interest income increased by $863,000, primarily attributable to additional investments as a result of the issuance of the 7 1/2% Convertible Subordinated Notes due 2006 ("7 1/2% Notes"). Interest expense increased by $1,527,000, primarily due to the issuance of the 7 1/2% Notes and a special one-time charge of approximately $113,000 for the unamortized portion of the financing costs pertaining to the redemption of the 9% Convertible Subordinated Debentures in the first quarter of 1997. Other income/expense relates to the operations of the theatre joint venture, MetroLux Theatres and gain on sale of securities. The effective tax rate at September 30, 1997 and 1996 was 43.0% and 42.0%, respectively Three Months Ended September 30, 1997 Compared to Three Months Ended September 30, 1996 The Company's total revenues for the three months ended September 30, 1997 increased 17.3% to $14.4 million from $12.2 million for the same period in the previous year. Revenues from equipment rentals and maintenance increased $172,000 or 3.2% in 1997, primarily due to the increase in new indoor display rentals and maintenance contracts, offset by the expected decline in revenues from the outdoor lease and maintenance bases previously acquired, although the decline is at a slower rate than originally anticipated. Revenues from equipment sales increased $1,714,000 or 30.6% in 1997, primarily due to the Fairtron acquisition in May 1997 and increased revenue from the sales of outdoor products. This increase was offset by a decline in revenue from the sales of indoor products. In 1996 the Company recognized certain significant sales on the percentage of completion basis which did not recur in 1997. Revenues from theatre receipts and other increased $234,000 or 18.0% in 1997, primarily attributable to the Gaslight Cinemas and Lake Dillon Cinemas acquisitions in March 1997 and September 1997, respectively, and the increase in attendance at the theatres. 8 Cost of equipment rentals and maintenance decreased by $156,000 or 5.3% in 1997, primarily due to the favorable impact of $250,000 as a result of a change in the estimate of the useful lives of the rental equipment. The cost of equipment rentals and maintenance represented 51.0% of related revenues for the three months ended September 30, 1997 compared to 55.5% in 1996. Cost of equipment sales increased $1,228,000 or 33.0% in 1997, primarily due to the Fairtron acquisition and the increase in sales of outdoor products, offset by the decline in sales of indoor products. In 1996 the Company recognized certain significant sales on the percentage of completion basis which did not recur in 1997. The cost of equipment sales represented 67.7% of related revenues for the three months ended September 30, 1997 compared to 66.5% in 1996. Cost of theatre receipts and other increased $200,000 or 20.5% in 1997, primarily due to the Gaslight Cinemas and Lake Dillon Cinemas acquisitions and the increase in film rental costs resulting from increased box office receipts. The cost of theatre receipts and other represented 76.6% of related revenues for the three months ended September 30, 1997 compared to 75.0% in 1996. General and administrative expenses increased by $572,000 or 17.0%, primarily due to the Fairtron acquisition, expanded sales efforts and increased payroll and benefits costs. Interest income increased by $229,000, primarily attributable to additional investments as a result of the issuance of the 7 1/2% Notes. Interest expense increased by $434,000, primarily due to the issuance of the 7 1/2% Notes. Other income/expense relates to the operations of the theatre joint venture, MetroLux Theatres and gain on sale of securities. Accounting Standards The Company will adopt the provisions of Statement of Financial Accounting Standards No. 128, "Earnings per Share" in the fourth quarter of 1997. The standard specifies the computation, presentation and disclosure requirements for earnings per share. As required by the standard, the Company will restate all prior period earnings per share data presented. The adoption of the new standard is not expected to have a material effect on the computation of earnings per share. In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income". The standard requires that all items that meet the definition of components of comprehensive income be reported in a financial statement for the period in which they are recognized. The standard is effective for fiscal years beginning after December 15, 1997. In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 131, "Disclosure about Segments of an Enterprise and Related Information". The standard requires certain information be reported about operating segments, products and services, the geographic areas in which they operate and major customers. The standard is effective for fiscal years beginning after December 15, 1997 Liquidity and Capital Resources Historically, the Company's primary sources of liquidity and capital resources have been cash flow from operations and bank borrowings. During late 1996, the Company issued $27.5 million of the 7 1/2% Notes. On January 14, 1997 the Underwriter exercised its over-allotment option, bringing the total amount outstanding to $31.6 million. The Company believes that cash generated from operations together with the proceeds from the issuance of the 7 1/2% Notes will be sufficient to fund its anticipated further cash requirements. The Company also has a $5.0 million revolving credit facility accessible through June 1998, at which time will convert into a five-year term loan. As of September 30, 1997, $1.1 million of the revolving credit facility is available. The revolving credit facility was reduced to $5.0 million from $7.0 million at January 31, 1997 at the Company's request. The Company is currently negotiating an increase, to which 9 the bank has agreed, to the revolving credit facility to $10.0 million. The net proceeds of the 7 1/2% Notes were used, in part, to pay down certain of the Company's debt, which included prepayment of the 1997 principal amounts due under the credit facility, payment of the balance outstanding under the revolving credit facility at that time and to call and retire the 9% Convertible Subordinated Debentures. The $18.9 million decrease in cash and cash equivalents for the nine months ended September 30, 1997 is primarily attributable to the net investment of $11.4 million of the net proceeds of the 7 1/2% Notes in available-for-sale securities, cash utilized for investment in rental equipment and cash utilized in connection with the acquisitions during the nine months ended September 30, 1997. The $611,000 decrease for the nine months ended September 30, 1996 was primarily attributable to cash utilized for investment in rental equipment, an increase in accounts receivable which was attributable to the timing of large equipment sales, unbilled receivables and a decrease in deferred revenue and deposits which was primarily due to the timing of recording the revenues versus billings, and the loan to the theatre joint venture, MetroLux Theatres. The increase in receivables and inventories at September 30, 1997 compared to December 31, 1996 is primarily attributable to the Fairtron acquisition. The regular quarterly cash dividend for the third quarter of 1997 of $0.035 per share on the Company's Common Stock and $0.315 per share on the Company's Class B Stock was declared by the Board of Directors on September 27, 1997 payable to stockholders of record as of October 10, 1997 and was paid October 24, 1997. - ------------------------------------------------------------------------------- The Company may, from time to time, provide estimates as to future performance. These forward looking statements will be estimates, and may or may not be realized by the Company. The Company undertakes no duty to update such forward looking statements. Many factors could cause actual results to differ from these forward looking statements, including loss of market share through competition, introduction of competing products by others, pressure on prices from competition or purchasers of the Company's products, interest rate and foreign exchange fluctuations. - ------------------------------------------------------------------------------- Part II - Other Information --------------------------- Item 6. Exhibits and Reports on Form 8-K - ------- -------------------------------- (a) Exhibits 11 Computation of Earnings Per Share. 27 Financial Data Schedule, which is submitted electronically to the Securities and Exchange Commission for information only and not deemed filed. (b) A report on Form 8-K/A dated July 15, 1997 was filed reporting the acquisition of the catalog and custom scoreboard sign business segment of Fairtron Corporation. 10 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. TRANS-LUX CORPORATION --------------------- (Registrant) Date: November 14, 1997 by /s/ Angela D. Toppi ---------------------- Angela D. Toppi Senior Vice President and Chief Financial Officer by /s/ Robert A. Carroll ---------------------- Robert A. Carroll Chief Accounting Officer 11 EX-11 2
TRANS-LUX CORPORATION AND SUBSIDIARIES EXHIBIT 11 COMPUTATION OF EARNINGS PER SHARE FOR THE THREE MONTHS FOR THE NINE MONTHS ENDED SEPTEMBER 30 ENDED SEPTEMBER 30 -------------------------- -------------------------- 1997 1996 1997 1996 ---- ---- ---- ---- Primary: -------- Net income $425,000 $350,000 $1,006,000 $869,000 ========= ========= ========= ========= Average common shares outstanding 1,284,000 1,260,000 1,279,000 1,256,000 Assumes exercise of options reduced by the number of shares which could have been purchased with the proceeds from exercise of such options 37,000 31,000 30,000 27,000 --------- --------- --------- --------- Average common and common equivalent shares outstanding 1,321,000 1,291,000 1,309,000 1,283,000 ========= ========= ========= ========= Primary earnings per share $0.32 $0.27 $0.77 $0.68 ========= ========= ========= ========= Fully diluted: -------------- Net income $425,000 $350,000 $1,006,000 $869,000 Add after tax interest expense applicable to 9% convertible subordinated debentures ---- 64,000 102,000 195,000 Add after tax interest expense applicable to 7 1/2% convertible subordinated notes 364,000 ---- 1,086,000 ---- --------- --------- --------- --------- Adjusted net income $789,000 $414,000 $2,194,000 $1,064,000 ========= ========= ========= ========= Average common shares outstanding 1,284,000 1,260,000 1,279,000 1,256,000 Assumes exercise of options reduced by the number of shares which could have been purchased with the proceeds from exercise of such options 44,000 35,000 44,000 36,000 Assumes conversion of 9% convertible subordinated debentures ---- 379,000 79,000 382,000 Assumes conversion of 7 1/2% convertible subordinated notes 2,257,000 ---- 2,243,000 ---- --------- --------- --------- --------- Average common and common equivalent 3,585,000 1,674,000 3,645,000 1,674,000 shares outstanding ========= ========= ========= ========= Fully diluted earnings per share $0.22 $0.25 $0.60 $0.64 ========= ========= ========= =========
EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF INCOME FILED AS PART OF THE QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS ON FORM 10-Q. 1,000 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 356 12,197 8,006 0 4,717 25,711 86,376 29,946 89,505 8,441 32,682 2,740 0 0 21,134 89,505 17,043 38,514 11,043 23,063 0 0 3,291 1,765 759 1,006 0 0 0 1,006 0.77 0.60
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